Analysis On Bulgaria

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External historical events often changed Bulgaria's national boundaries in its first century of existence, natural terrain features defined most boundaries after 1944, and no significant group of people suffered serious economic hardship because of border delineation. Postwar Bulgaria contained a large percentage of the ethnic Bulgarian people, although numerous migrations into and out of Bulgaria occurred at various times. None of the country's borders was officially disputed in 1991, although nationalist Bulgarians continued to claim that Bulgaria's share of Macedonia--which it shared with both Yugoslavia and Greece--was less than just because of the ethnic connection between Macedonians and Bulgarians. In 1991 Bulgaria had a total border of about 2,264 kilometers. Rivers accounted for about 680 kilometers and the Black Seacoast for 400 kilometers. Ridges in mainly defined the southern and western borders high terrain. The western and northern boundaries were shared with Yugoslavia and Romania, respectively, and the Black Sea coastline constituted the entire eastern border. The Romanian border followed the Danube River for 464 kilometers from the northwestern corner of the country to the city of Silistra and then cut to the east-southeast for 136 kilometers across the northeastern province of Varna. The Danube, with steep bluffs on the Bulgarian side and a wide area of swamps and marshes on the Romanian side, was one of the most effective rivers boundaries in Europe. The line through Dobruja was arbitrary and was redrawn several times according to international treaties. In that process, most inhabitants with strong national preferences resettled in the country of their choice. Borders to the south were with Greece and Turkey. The border with Greece was 491 kilometers long, and the Turkish border was 240 kilometers long. Bulgaria covers approximately 110,550 square kilometers. Its topography is mostly hills combined with plateaus, with major flatlands to the north and the center of the country. Its main mountain ranges Balkan and Rhodope include two major ranges, Pirin and Rila. The climate is divided by mountains into continental and Mediterranean. The rainfall is very variable, with largest amounts in higher elevations. Its population estimate is 8,989,172. Its 1990 growth rate was negative .35 percent, and its population density eighty-one per square kilometer. Bulgaria’s official state language is Bulgarian. There is also a main national minority language witch is Turkish. Bulgaria has many different ethnic groups. The country is made up of 85% Bulgarians, 8.5% Turks, 2.5% Gypsies, 2.5% Macedonians, 0.3% Armenians, and 0.2% Russians. The country’s religion is 85% Bulgarian Orthodox, 13% Muslim, 0.8% Jewish, and 0.5% Roman Catholic. There was a significant increase in public worship and observance of religious holidays beginning in1990. The country’s health system in post-World War II era became available to large part of population through a polyclinic system, with all medical services free. In 1990 the state control was removed to promote diversity and specialization and reduce bureaucracy. There were serious shortages of medical supplies in the early 1990s. Education is mandatory between the ages of seven and sixteen. The re was an extensive growth in education system in post-World War II era, with a rigidly Marxist ideological curriculum. A complete restructuring, modernization, and depoliticization program in the education system began in 1990. Why do business in Bulgaria? Bulgaria has many resources to offer. External investment in Bulgaria was slow right after the abolishment of communism, but it has been increasing at an accelerated pace since the new political and economical reforms have been implemented. Some of the resources that Bulgaria has to offer to its foreign investors are location, high skilled workforce, and low wages. Bulgaria’s location between Europe and the Middle East gives the country a very strategic position. Also all land routes from Euro to Asia pass through the country. It is also equidistant from Europe, the Middle East, and Africa; this would make Bulgaria a perfect location for manufacturing and distribution to the above mentioned regions. Culture The social system in this country is quiet interesting. Most manifestations of traditional Bulgarian familial and societal relations disappeared in the initial postwar wave of modernization, but some traditions were persistent and survived into the 1990s, especially in parts of western and southwestern Bulgaria. Although postwar communist regimes nominally emphasized emancipation of women, strong elements of paternalism and emphasis on traditional female roles remained in Bulgarian society. By 1990 economic forces had eliminated traditional extended families and limited the number of children, especially in urban areas. Some evidence of resurging traditional relationships was seen in the immediate post-Zhiov years. Bulgaria has been a crossroads for population movement. Early settlement occurred mainly in the most fertile agricultural lands. After World War II, however, Bulgarian cities grew rapidly at the expense of rural population in concert with state industrialization policy. Administrative Subdivisions In 1991 Bulgaria was divided into nine provinces. These administrative units included the city of Sofia and eight provincial districts: Burgas, Khaskovo, Lovech, Mikhaylovgrad, Plovdiv, Razgrad, Sofiya and Varna. Each province was named for t he city that was its administrative center. Excluding the city of Sofia, the provinces encompassed territories ranging from 9.5 percent of the country to 17.2 percent, and their population ranged from 7.5 percent to 14 percent of the national total. The eight provinces were divided into a total of 273 communities. The city of Sofia was divided into districts. Because this system was established in 1987, references to another type of district, the okrug remained common in the early 1990s. The new government that took office in 1991 announced that yet another change was needed in Bulgaria's political subdivisions because the 1987 system reflected the discredited policies of the Zhiov regime. The 1985 census recorded Bulgaria's population at 8,948,649, an increase of 220,878 over the 1975 census figure. At the end of 1990, the Central Statistical Bureau had estimated an updated figure of 8,989,172, including about 100,000 more women than men. However, the estimates for 1989 and 1990 did not account for major emigrations in those years: first the massive emigration of Turks in 1989, then the emigration of ethnic Bulgarians in 1990. Adjusting for emigration figures, the population figures actually decreased between 1985 and 1990. Bulgaria's 1989 population density figure of eighty-one people per square kilometer made it one of the least densely populated countries in Europe. Bulgaria's rate of population growth began a steady decrease in the mid-1920s, and the trend accelerated thereafter. Before World War II, a man's status in his community was determined by how many children he had. Women who did not marry, or who married but had no children, were seen as failures. As the country became more urbanized, however, such traditional views gradually disappeared. Large families were no longer the economic necessity they had been in agricultural society, and extra children became a burden rather than a boon. As women became more educated and less accepting of the traditional patriarchal family norms, their attitude toward childbearing changed. In 1990 the majority of Bulgarian women believed two children ideal for a family, but because of economic and social conditions, their personal preference was to raise only one. By the 1980s, this change in attitude had begun to prevail even in villages and with less-educated women. In 1985, 75 percent of Bulgarian women indicated that they would not like to have any more children. Families with three or more children became a rarity, and women who opted for more than two children had a lower standard of living and were generally less respected in society. Although few social planners advocated a return to the large families of the past, Bulgarian policy makers were dismayed that the population did not increase. During the Zhiov era, the mass media and scholarly journals expressed concern that the nine millionth Bulgarian had not yet been born, and that families were unwilling to have two children instead of one. By 1985 population experts were urging that 30 to 40 percent of families have three children to make up for those, which had none or only one. Meanwhile, although the 1973 Politburo had affirmed a family's right to decide how many children to have and when they should be born, in the 1970s and 1980s contraceptives were not available in sufficient quantity for family planning. Strict restrictions on abortions established by the Zhiov regime was repealed in 1990. Partly because contraceptives were in short supply, abortions had surpassed births by 1985 despite the restrictions. Until 1990 bachelors and unmarried women had to pay a 5 to 15 percent "bachelors' tax" depending on their age. In a more positive step, laws provided family allowances for children under sixteen. The age limit for the family allowance was raised to eighteen in 1990 for children still in school. In 1990 Bulgarian demographers recorded a negative growth rate for the first time. At that point, the number of live births per woman were 1.81. Demographers reported that the figure must increase to 2.1 to maintain the country's natural rate of population replacement. Mortality figures in Bulgaria were also much higher than those of the developed European countries. The most alarming demographic trend of the late 1980s, however, was substantially greater emigration totals. The 1989 Turkish exodus caused by the Zhiov assimilation campaigns had a severe impact on the Bulgarian labor force. Then, in 1990, economic reform brought harsh living conditions that stimulated a wave of emigration by ethnic Bulgarians. As of March 1991, some 460,000 Bulgarians had emigrated, bringing the total number of Bulgarians living abroad to about 3 million. The majority of the émigré population remained in nearby countries (1.2 million in Yugoslavia, 800,000 in other Balkan countries, and 500,000 in the Soviet Union). Smaller numbers went as far as the United States (100,000 to 120,000), Canada (100,000), and Argentina (18,000), and Australia (15,000). Throughout its history, the Balkan Peninsula was a homeland for many diverse ethnic groups that were able to preserve their national identities despite being shifted among the jurisdictions of powerful empires. In modern Bulgaria, the opposite has been true: the largest minority ethnic group, the Turks, remained in territory that their Ottoman ancestors had occupied. After the fall of the Zhiov government, Bulgaria moderated its minority policy substantially to improve delicate relationships with neighboring countries such as Turkey and Yugoslavia. The 1893 census listed the following nationalities and religious groups in order of prevalence: Eastern Rite Orthodox Bulgarians, Turks, Romanians, Greeks, Gypsies, Jews, Muslim Bulgarians, Catholic Bulgarians, Tatars, Gagauzi (a Turkishspeaking people of the Eastern Orthodox faith), Armenians, Protestant Bulgarians, Vlachs (a Romanian- speaking people in southwest Bulgaria), and foreigners of various nationalities, mainly Russians and Germans. Migrations and boundary changes after the two world wars reduced the list somewhat; few Greeks and Romanians remained in Bulgaria by 1990. However, Bulgaria's communist leaders often tried to deny the existence of minority groups by manipulating or suppressing census data or by forcibly assimilating "undesirable" groups. In 1985, at the height of the last anti-Turkish assimilation campaign, a leading Bulgarian Communist Party official declared Bulgaria "a one-nation state" and affirmed that "the Bulgarian nation has no parts of other peoples and nations." After the fall of Todor Zhiov in 1989, all the minorities in Bulgaria progressed somewhat toward self-determination and freedom of expression. New minority organizations and political parties sprang up, and minority groups began publishing their own newspapers and magazines. Non-Bulgarian nationalities regained the right--curtailed in the Zhiov era--to use their original names, speak their language in public, and wear their national dress. In 1991 significant controversy remained, however, as to how far the rights of minorities should extend. Legislators making policy on such issues as approval of non-Bulgarian names and Turkish-language schools faced mass protests by nationalist Bulgarians, who successfully delayed liberalization of government policy on those issues. During the Zhiov era, Bulgaria signed several friendship treaties with other Comecon nations to ease the exchange of workers. In the 1980s, for example, a large number of Bulgarians worked in the construction and timber industries of the Komi Autonomous Soviet Socialist Republic under an exchange agreement with the Soviet Union. Workers were expected to return to their own countries when their contracts ended, but they did not always do so. For example, some Vietnamese construction workers sent to Bulgaria under Comecon agreement in the 1980s remained, and in 1991 the Vietnamese population of Bulgaria was 11,000. Because they arrived completely unprepared for life in Bulgaria and began working after only one month of training and language courses, the Vietnamese who remained in Bulgaria generally received the hardest and lowest-paying jobs and often became involved in criminal activity. In 1991 several violent incidents involving Vietnamese provoked calls for their repatriation. In response, the government made plans to expel all resident Vietnamese from Bulgaria in 1992. The Bulgarian Orthodox Church, which played a crucial role in preserving Bulgarian culture during the Ottoman occupation, remained central to the sense of Bulgarian nationhood even under the postwar communist regimes. In spite of the official status of Orthodoxy, Bulgaria also had a tradition of tolerance toward other Christian religions. Tolerance of Islam, however, remained problematic under all forms of government because of that religion's historical identification with the occupation and subjugation of Bulgaria. In 1991 most Bulgarians were at least nominally members of the Bulgarian Orthodox Church, an independent national church like the Russian Orthodox Church and the other national branches of Eastern Orthodoxy. Because of its national character and its status as the national church in every independent Bulgarian state until the advent of communism, the church was considered an inseparable element of Bulgarian national consciousness. Baptism, before 1944 an indispensable rite establishing individual identity, retained this vital role for many even after the communists took power. The power of this tradition caused the communist state to introduce a naming ritual called "civil baptism". Although communist regimes could not eliminate all influence, they did undermine church authority significantly. First, the communists ruled that the church only had authority on church matters and could not take part in political life. Second, although the constitution made the church separate from the state, the clergy's salaries and the fees needed to maintain the churches were paid by the state. This meant that the clergy had to prove its loyalty to the state. From 1949 until 1989, religion in Bulgaria was mainly controlled by the Law on Religious Organizations, which enumerated the limitations on the constitution's basic separation of church and state. The number of Orthodox priests declined from 3,312 in 1947 to 1,700 in 1985. Priests associated with the prewar regime were accused of engaging in illegal or antisocialist activities, supporting the opposition, and propagandizing against the state. Upon taking control of all church property, the state had the choice of maintaining churches or closing them down. Thus, for example, Rila Monastery, the largest monastery in Bulgaria, became a national museum in 1961. In 1987 the Orthodox Church had 3,720 churches and chapels, 120 monasteries, 981 regular and 738 retired priests, 135 monks, and 170 nuns. The church was administered by a Holy Synod. Under communist rule, the synod had the authority to publish limited quantities of religious material such as magazines, newspapers, and church calendars. A new translation of the Bible was published in 1982, but in such small quantities that the size of the printing could not be determined. By 1988 the 1982 edition was being resold at ten times the original price. After the fall of Zhiov, the Orthodox Church and other churches in Bulgaria experienced a revival. Church rituals such as baptisms and church weddings attracted renewed interest, and traditional church holidays were observed more widely. Christmas 1990, the first Christmas under the new regime, was widely celebrated and greatly promoted in the mass media. By contrast, Christmas had received little public attention during the postwar years. The government returned some church property, including the Rila Monastery, and religious education and Bible study increased in the early post-Zhiov years. The Orthodox seminary in Sofia returned to its original home in 1990 and attracted over 100 male and female students in its first year of operation. The Konstantin Preslavski Higher Pedagogical Institute added a new theology department to train theology, art, and music teachers as well as priests. The Holy Synod planned to publish 300,000 Orthodox Bibles in 1992. Between independence and the communist era, the Bulgarian government had used its social welfare funds mainly for government workers, army officers, white-collar workers, craftsmen, and tradesmen. The 1949 social welfare law founded a new social welfare system that endured into the 1990s. The new system greatly expanded the categories of people eligible and the amounts they could receive. The social welfare system in 1991 was largely based on the 1951 section of the Labor Code which regulated monetary compensation and supplements, and the 1957 Law on Pensions. Both laws were revised countless times and no longer agree with each other. The National Assembly delayed creation of a new law until the new constitution was ratified in the summer of 1991. In 1991 two-thirds of Bulgaria's social welfare budget was spent on pensions; the rest went for monthly child-care allowances and other programs. As of late 1990, the Bulgarian government provided over 4 billion leva per year to 2,300,000 pensioners— almost one fourth of the entire population. To keep pace with the rising cost of living in the transition to a Western economic system, the government had to index pensions several times in 1990. By the beginning of 1991, some 165 leva were being added monthly to every pension, casting doubt on the long-term possibility of maintaining the program. The ratio of Bulgaria's pensioners to its total population was the largest in the world, almost twice that of most Western countries. Because the society was aging, some experts declared that workers should be encouraged to remain in the work force and participate actively in society much longer than had been the practice under the communist regimes. In early 1991, in a further effort to keep pace with the rising cost of living, the Council of Ministers established a new minimum wage and new subsidy levels for all social welfare programs. Anyone who had received the old monthly minimum wage of 165 leva would now be compensated 270 leva to provide for a new minimum wage of 435 leva. This minimum wage was subsequently changed three times in 1991, peaking at 518 leva. The 1991 program also gave 242 leva to pregnant or nursing women and to those on temporary workers' disability. Child-care compensation for households with children under three years of age was raised to 90 leva, with a monthly supplement of 100 leva per child. In 1991 several cost-of-living increases were added to those categories as well. In 1991 unemployment compensation was set at 270 leva per month; students over eighteen received 130 leva per month; graduate students, 230 leva. Those payments were funded from the state budget and from enterprise salary budgets, neither of which seemed adequate to keep pace with rapidly changing prices in 1991. Under socialism all citizens who had been awarded the title "active fighter against fascism and capitalism" for military or civilian contributions in World War II received a large pension and special privileges such as free public transportation, free medical prescriptions, and free vacations at special resorts. After much controversy, those privileges were abolished in 1990. Legal System In Bulgaria Guided by the striving for transition to a market economy and encouragement of foreign investments the Bulgarian Parliament passed a series of laws: Law on Commerce, Law on Foreign Investments, Law on Banks, Law on Insurance, Law on Corporate Taxation, Value Added Tax Law, Law on Excise Duties, Income Tax Law; Concessions Law; Law on Transformation and Privatization of State-Owned and Municipal Enterprises, Law on Protection of Competition, Law on Cooperatives, Law on International Commercial Arbitration, Equal rights and position of the Bulgarian and the foreign subjects. Priority aspects of the business activities of the foreign persons are legally regulated likewise in the Constitution of the Republic of Bulgaria, in the Council of Ministers, and in some other operative legal acts. Bulgaria has concluded bilateral agreements for the mutual protection of investments with various countries like Germany, France, Italy, China, USA and Finland; agreements for economic and trade cooperation with Italy, Germany and the United Kingdom. There is an unlimited foreign participation in all forms of business activity registered in Bulgaria. The forms of activity in Bulgaria are: a branch; a representative office; a private merchant; a limited liability company (single-person or with the capital of several persons); an unlimited partnership; a public limited company; a limited partnership; holdings; cooperative; a joint stock company; a sole trader; a joint venture. Private merchants, branches and representations aren’t independent legal entities. Branch offices may engage in economic activities; they have their own property and compile a separate balance sheet. Representation offices may not engage in economic activities. Holdings and cooperatives are legal entities. The forms of business organization, save representative offices and co-operatives, are governed by the Commerce Act 1991, as for certain types of companies (e.g., banks, insurance companies, public companies) special rules apply. Representative offices and co-operatives are regulated respectively by the Foreign Investments Act 1997 and by the Co-operatives Act 1999. The most appropriate types of companies for conducting business in Bulgaria are the limited liability and the joint-stock company, including in the form of a single-member company. These types of companies must be entered into the commercial register of the relevant district court. Private Limited Company is a commercial company, whose capital is formed by the quotas (shares) of its shareholders. The members' liability is limited to the amount of the capital they have subscribed. A private limited liability company must be founded by at least two persons, including foreign natural or legal persons. The minimum authorized capital is BGN 5,000. At least 70% of the capital must be paid before registration. One person owns a private limited company, including a foreign individual or legal entity. The sole owner exercises the powers of both the general meeting and the manager, unless another manager has been appointed to run the company. The sole owner's liability is limited to the amount of the capital subscribed. Joint-Stock Company is a company whose capital is divided into shares, each of a par value of at least BGN 0,1. Any higher par value must be divisible by 100. The company is liable to its creditors to the extent of its assets. A Joint-Stock Company is required to have no fewer than two shareholders, including foreign individuals and legal persons. The only exception to this rule occurs when the State is the only founder and, therefore, the sole owner of the whole capital of the company. In this case we have a one-member public limited company. The minimum capital is BGN 50,000 or BGN 100,000 if the capital is raised by subscription. A higher minimum capital is required to establish a bank, insurance company or an investment company: banks - BGN 10,000,000; Insurance companies- BGN 2,000,000 for life insurance and personal accident insurance- BGN 3,000,000 for property insurance- BGN 4,000,000 for reinsurance; Investment companies - BGN 500,000,000 Public Company is a new type of joint-stock company introduced by the Securities, Stock Exchanges and Investment Companies Act, now repealed by the Public Offering of Securities Act (POSA). A company must register as public where it makes a primary offering of shares; or its shares are registered for trading on an organized securities market. Another way to create a public company is through a business combination involving at least one public company - the surviving company will be public, too. Holding company is any joint-stock company, partnership limited by shares or private limited company. A holding company can hold interest in any form or participate in the management of and control over other companies. It can also conduct its own business, or hold interest in other companies and control them. The activities a holding can perform or is disallowed to perform are exhaustively enumerated in the Commerce Act. Branch - foreign legal entities registered abroad, as well as foreign individuals or persons other than legal entities can register a branch in Bulgaria if fully incorporated and entitled to conduct business activities under their national law. A branch of a foreign person is part of its parent company, but has a different seat. A branch is not a legal entity. However, it must keep account books just like independent legal entities do. Although branches are not legal persons, branches of non-resident companies have separate balance sheet and profit and loss account. They are subject to corporate income tax at the standard rate of 20%, and to other general taxes too. Foreign persons, entitled to engage in business activity under their national law, can set up representative offices. Representative offices are not legal entities and may not engage in economic activities. They are not subject to corporate taxation. Joint Venture is a company formed jointly by a Bulgarian and a foreign partner. The extent of the foreign participation in a joint venture is not limited. Joint ventures must take one of the forms of business entities under the Commerce Act. Establishing a joint venture is one of the forms of investing in Bulgaria. Other forms of business organizations are: General Partnership is a company founded by at least two partners for the purpose of engaging in commercial transactions under a joint business name. The partners bear joint and unlimited liability. A foreign person must be resident in Bulgaria in order to participate in a general partnership. There are no requirements for minimum or maximum amount of registered capital. Limited Partnership is a company founded by two or more persons for the purpose of engaging in commercial transactions under a joint business name. In a limited partnership there are one or more general partners, bearing unlimited liability, and one or more limited partners, whose liability is limited to the extend of their agreed capital contribution. Partnership Limited by share is a transitional entity between a joint-stock company and a limited partnership, and shares features of both legal forms. A partnership limited by shares has general partners, who have unlimited liability, and at least three limited partners, whose liability is limited to the extent of their shareholding. To be able to participate in a partnership limited by shares the foreign general partners must be residents in Bulgaria. Co-operative Society - a co-operative is a voluntary society of individuals, with a non-fixed capital and a non-fixed number of members, who carry out economic and other activities to satisfy their interests, by mutual aid and co-operation. A co-operative is a legal entity and is deemed a merchant under the Commerce Act. Co-operative members can only be individuals, at least 7 in number. To participate in a co-operative, foreign person should have permanent residence in Bulgaria. Sole Trader - any capable individual, residing in the country, can register as a sole trader. State Companies - they exist under the forms of one-member private limited or joint-stock companies where the quotas/shares are solely owned by the State. These forms of business are established to facilitate the process of privatization of the state companies through the sale of their shares to private persons. Municipal Companies - the above mentioned in respect of the State and the its fully or partially owned companies is accordingly relevant to the municipalities and their companies. Taxes. Bulgaria has signed agreements for avoiding double taxation with 41 countries. A company is resident in Bulgaria for tax purposes if it is registered in Bulgaria. Companies resident in Bulgaria are subject to tax on their worldwide income. Foreign entities are subject to tax on their Bulgarian-source income, but their Bulgarian branches are considered Bulgarian resident companies for tax purposes. Corporate income tax Under the Corporate Income Tax Act (CITA) states that all companies and partnerships are liable to corporate income tax. Tax on insurance and re-insurance premiums Insurance companies pay one-time final tax on insurance premiums and on any other kind of income and are not obliged to pay corporate income taxes separately for their activities other than insurance or re-insurance. The rate of the special tax for insurance companies is 7%, except for life insurance companies whose income will be taxed at 2%. Entertainment and representative expenses and business gifts, that do not bear the trademark or the business name of the company, as well as donations and sponsorships, which are not accounted for as expenses, are subject to a final 25% tax. Social expenses representing fringe benefits in kind, as well as expenses for maintenance, repair and exploitation of cars are subject to a final 20% tax. Capital gains are included in the corporate income and taxed at the full corporate tax rate. Foreign income. Income, derived outside Bulgaria by resident entities and branches of non-residents, is included in the taxable base for corporate income tax purposes. Resident entities utilize tax credit for the foreign source income, which is taxed abroad. The tax credit is limited to the amount of the Bulgarian tax obligation, which would have been levied if the profit or income had originated from Bulgaria. Loses are carried forward over the following five years (ten years - for banks). Carry-forward of foreign source losses is restricted. Loss carry-back is not permitted. Tax Exemptions. Entities, investing in regions with a high unemployment, enjoy a reduction of the corporate income tax if the investment is in the form of acquisition, modernization or reconstruction of tangible fixed assets such as buildings, equipment, transmitters, electricity transmitters, and telecommunication lines. The fund for the investment is generated from the contributions made by shareholders for acquisition of new shares (including on incorporation) in the company making the investment. If the requirements for the tax reduction are met the corporate tax is reduced by an amount representing 10% of the amount of the share contributions used in the above manner. The sum for the reduction is accounted for as reserves and if greater than the corporate tax in the respective year it can be used to reduce the corporate tax in the following five years. Violations and Fines. A fine of at least BGN 100, but not exceeding BGN 500, shall be imposed on any person under an obligation pursuant to the Commerce Law which does not apply for registration within the prescribed time periods or does not present documents or signatures provided for in this Law. If, after a fine has been imposed, the person under an obligation does not apply for registration or does not present the documents or signatures within the time period determined by the court, further fines shall be imposed upon such person until the acts are performed. Fines shall also be imposed upon officials who, when they are obliged to do so: have not informed officially the respective district court of the occurrence of a circumstance which is subject to registration, and do not undertake the necessary action for registration. The statements for establishing the violations shall be drawn up by the mayors of communities, and the penal orders shall be issued by the mayors of municipalities or persons designated by them. The establishment of the violations, the issuing, appeal and enforcement of the penal orders shall be done pursuant to the Law on Administrative Violations and Penalties. Bulgarian intellectual property legislation has been strengthened recently, and now includes modern patent and copyright laws and criminal penalties for copyright infringement. Bulgarian legislation in this area is considered to be among the most modern in Central and Eastern Europe. Infringement of trademarks is a problem in Bulgaria for many U.S. manufacturers. While the law allows for confiscation of offending products, infringement is deemed a misdemeanor under the Penal Code and subject to a nominal fine that does not act as a deterrent to illegal activities. However, the competition law provides for fines of up to BGN 500,000 for companies, which use misleading packaging, trademarks or other signs, which injure the interest of competitors. Bulgaria made the most difficult part of the transition. The Stability Pact, a comprehensive regional plan for economic development, democratization and security, will lead to new and expanded trade and investment opportunities in Bulgaria over the long term. The U.S. Government vigorously supports efforts to bring Stability Pact benefits to Bulgaria. The Bulgarian Government will create conditions for opening of new jobs, for elimination of the bureaucratic obstacles and difficulties in business, for tax burden alleviation, for easier and quicker access to financial and material resources for development of production and trade. POLITICAL SYSTEM/ GOVERNMENT Having fought on the losing side in both World Wars, Bulgaria fell within the Soviet sphere of influence and become a People’s Republic in 1946. Communist domination ended in 1991 within the dissolution of the USSR, and Bulgaria began the contentious process of moving toward political democracy and a market economy while combating inflation, unemployment, corruption, and crime. Today, reforms and democratization keep Bulgaria on a path toward eventual integration into the EU and NATO. Besides that, Bulgaria has the following active international organization participation: ACCT, BIS, BSEC, CCC, EBRD, EU (applicant), FAO, IAEA, IBRD, ICAO, ICFTU, Inmarset, Intelsat (non-signatory user), Interpol, NAM (quest), WEU (associate partner). Ambassador Snezhana Botusharova carries the diplomatic representation of Bulgaria in U.S. The Bulgarian flag has three equal horizontal bands of white (top), green, and red; the national emblem formerly on the hoist side of the white stripe has been removed. It contained a rampant lion within a wreath of wheatears below a red five-pointed star and above a ribbon bearing the dates 681 (first Bulgarian state established) and 1944 (liberation from Nazi control). POLITICAL RCONOMY-OVERVIEW In April 1997, the current ruling Union of Democratic Forces (UDF) government won pre-term parliamentary elections and introduced an IMF currency board system which succeeded in stabilizing the economy. The triple digit inflation of 1996 and 1997 has given way to an official consumer price increase of 6,2% in 1999. Following declines in GDP in both 1996 and 1997, the economy grew an officially estimated 3,5% in 1998 and 2,5% in 1999. In September 1998, the IMF approved a three year Extended Fund Facility that provides credits worth approximately $900 million, designed to support Bulgaria’s reform efforts. In 1999, an unfavorable international environment- primarily caused by the Kosovo conflict- and structural reforms slowed economic growth, but forecasters are predicting accelerated growth over the next several years. The government’s structural reform program includes: (a) privatization and, where appropriate, liquidation of state-owned enterprises (SOEs); (b) liberalization of agricultural policies, including creating conditions for the development of a land market; (c) reform of the country’s social insurance programs; and (d) reforms to strengthen contract enforcement. THE GOVERNMENT We begin this section with the extract from the Chapter 1 Fundamental Principles, Article1: “(1) Bulgaria is a republic with a parliamentary form of government. (2) The entire power of the state shall derive from the people. The people shall exercise this power directly and through the bodies established by this Constitution. (3) No part of the people, no political party nor any other organization, state institution, or individual shall usurp the expression of the popular sovereignty.” Bulgaria is a Parliamentary Republic and the Legislature is the basic power within the country. The National Assembly is vested with the legislative power and exercises parliamentary control. Its mandate is for a term of four years. The Council of Ministers is the principal body of the executive branch. Chaired by the Prime Minister, it heads and implements the domestic and the foreign policy of the state, ensures the public order and the national security, exercises the overall guidance over the state administration and the Armed Forces. The Prime Minister designate is nominated by the largest parliamentary group and is given a mandate by the President to form a cabinet. The proposed Council of Ministers is elected by the national Assembly. The activity of the Council of Ministers is under the direct control of the National Assembly. Individual ministers and the Prime Minister are obligated to answer questions and interpellations addressed by members of the National Assembly. The statute and the competence of the local bodies of the executive branch depend on the territorial division of the Republic of Bulgaria. The municipality is the basic administrative territorial unit at the level of which self-government is exercised. The region is an administrative territorial unit where the state authority is decentralized for the purpose of pursuing an effective regional policy. A regional governor, appointed by the Council of Ministers, performs the government of the region. The Supreme Legislative body in the country is the National Assembly, which exercises parliamentary control over the government. The judiciary is independent but continued to struggle with structural and staffing problems. Most citizens have little confidence in their legal system. HUMAN RIGHTS PRACTICES IN BULGARIA Most security services are the responsibility of the Ministry of the Interior, which controls the police, the National Security Service (civilian intelligence), internal security troops, border guards, and Special Forces. A number of persons known to be involved in repressive activities during the communist regime returned to senior-level positions in the security services in 1995. Some members of the police force committed serious human rights abuses. The post-communist economy remains heavily dependent on state enterprises. Most people are employed in the industrials and service sectors; key industries include food processing, chemical and oil processing, metallurgy, and energy. Principal exports are agricultural products, cigarettes and tobacco, chemicals, and metal products. Continued political and social resistance has retarded the transformation of the economy into a market-oriented system. Privatization of the large communist-era state enterprises has been very slow and is the main reason for Bulgaria’s economic stagnation. The government is now developing a mass privatization program, which (if successfully implemented) would partially address this problem. The service and consumer goods sectors in private hands continued to be the most vibrant. Although all indicators point to a reviving economy this year (2001), the last several years’ decline has affected the employment of people from ethnic minorities disproportionately. The annual per capita Gross Domestic Product of $1.300 provides a low standard of living. The government generally respected the human rights of its citizens, but problems remained in some areas. Constitutional restrictions on political parties formed on ethnic, racial, or religious lines effectively limit participation. There were several reports that police used unwarranted lethal force against suspects and minorities, and security forces beat suspects and inmates. Human rights observers charged that the security forces are not sufficiently accountable to Parliament or to society and that the resultant climate of impunity is a major obstacle to ending police abuses. Prison conditions are harsh, and pretrial detention is often prolonged. Mistreatment of ethnic minorities by the population at large is a serious problem, and both the government and the private citizens continued to obstruct the activities of some non-Eastern Orthodox religious groups. Discrimination and violence against women and Roma are serious problems. SPECIAL ECONOMIC CIRCUMSTANCES Bulgaria is still a largely cash economy. Visitors should exchange cash at banks or Change Bureaus. Some Change Bureaus charge commissions on both cash and travelers’ check transactions, which are not clearly posted. People on the street who offer high rates of exchange are confidence tricksters intent on swindling the unwary traveler. Old, dirty or very worn denomination bank notes are often not accepted at banks or Change Bureaus. Major branches of the following Bulgarian banks will cash travelers’ checks on the spot for Leva, the Bulgarian currency: Bulbank, Bulgarian Postbank, Biochim, First Investment Bank and United Bulgarian Bank (UBB). UBB also serves as a Western Union agent and provides direct transfer of money to travelers in need. ATM cash machines are increasing in numbers in Sofia and other major cities. Most shops, hotels, and restaurants, with the exception of major hotels, still do not accept travelers’ checks or credit cards. Due to the potential of fraud and other criminal activity credit cards and ATM’s should be used with caution. On July 5 1999, the Lev was re-denominated at a rate of 1,000 old Leva to one new Lev. BULGARIA AND NATO: LETTING NATO FORCES USE BULGARIAN TERRITORY In Sofia (March 29, 2001), Bulgarian Foreign Minister Nadezhda Mikhailova said on Thursday an agreement with NATO now before parliament would allow alliance forces to use Bulgarian territory in the event on a Balkan crisis. The government has asked parliament to ratify the agreement, which was signed in Brussels last week. Ratification is expected on Friday or early next week. The text of the agreement and an accompanying note from the government say Bulgaria would allow NATO forces taking part in operations to secure peace in the Balkans to use its land, air and sea space. Western diplomats say that quick expansion of NATO is unlikely, adding that states like Bulgaria has first to reform their armies and prove themselves in regional cooperation. THE BALKAN PROBLEM IN BULGARIA Bulgaria’s President Peter Stoyanov said on March 31, 2001 that recasting Balkan borders along ethic lines would be disastrous for the volatile region.” Redrawing borders in the Balkans in search of an identity for newly formed States based on ethnic or religious homogeneity threatens to destroy the very foundation of European civilization”, Stoyanov told at a conference in Sofia. His comments came after respected Balkans watchdog the International Crisis Group said that the West should stop trying to prevent the break-up of what remains of the former Yugoslavia. Western powers fear the break-up of federal Yugoslavia could fuel ethnic violence and trigger demands for more border changes in the region where a large ethnics Albanian community straddles several internal and international frontiers. Stoyanov said ethnic Albans in Yugoslavia had a right to live under a democratic system. He said the West should support promotion of civil societies in the Balkans to foster ethnic tolerance and help the region shed its image as Europe’s trouble spot. Bulgaria suffered economic losses but remained untouched during a decade of wars accompanying the break-up of the former Yugoslavia. It allowed NATO to use its airspace during the 1999 bombing of Yugoslav forces, which drove them out of Kosovo. But concerns have been raised in Bulgaria by the recent fighting between neighboring Macedonia and ethnic Albanian guerrillas along the Macedonia-Kosovo border. BULGARIA SETS STAGE FOR PARLIAMENTARY POLL Bulgarian president peter Stoyanov on March 29, 2001 set June 17 as the date of a parliamentary elections, expected to be a tight race in which exiled King Simeon II has emerged as a possible wi

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